Monday, August 29, 2011

Galaxy Tab 10.1: Samsung concedes another month in Australia

In geographic terms, Australia and Germany are antipodal to each other, but they have something in common: those are the only two countries in the world in which Samsung cannot sell its Galaxy Tab 10.1 for the time being due to legal constraints.

Prior to today's hearing, Samsung had provided Apple with samples of the Australian version of the Galaxy Tab 10.1, which it planned to launch in a couple of weeks. iTnews reported that Apple's Australian lawyer said that "the new model has, at least compared with the US version, some reduced functionality that changes the landscape to a limited extent", but still said that at least two patents were infringed. One of the patents mentioned appears to be the Australian equivalent of the "touch event model" patent that Apple asserted in the Netherlands. Interestingly, the Dutch judge didn't believe that the related patent was infringed by Samsung's products (he issued an injunction but it was based on a different patent).

According to various reports, Samsung's Australian lawyer initially opposed the idea of another delay of the product launch, but the judge didn't believe it would be a good decision for Samsung to launch a product against which Apple is preparing a detailed motion for a preliminary injunction. Subsequently to some internal discussion among Samsung's executives and lawyers, the Korean company agreed to a further delay.

After Samsung made a similar concession four weeks ago, I already predicted the following:

We can all set our watches by Apple: the moment Samsung sends them those pre-release samples, Apple will immediately shoot for a preliminary injunction.

There you have it: this is exactly what Apple is doing now. The whole story of the Australian product being "different" enabled Samsung to delay a formal decision by a month, and today Samsung was apparently afraid of a formal court decision against it and therefore agreed to delay the product launch once again. At this point Samsung can claim that it entered into this agreement "voluntarily", although it's clear to an increasing number of people that Samsung is under serious pressure. But formally, an agreement is always voluntary, unlike a court ruling against someone's opposition.

From a purely Australian perspective, it would make sense for Samsung to take its chances and ask the court to rule. But Samsung is a global player and has to consider the possible implications of a negative decision in Australia for its wider dispute with Apple (19 lawsuits in 12 courts in 9 countries on 4 continents).

During today's hearing in Australia, Samsung's lawyer said that Apple was taking advantage of the Australian situation in other jurisdictions. Actually, to the extent that I have seen Apple's filings, I don't see any indication of Apple telling courts in other countries anything other than the truth, which is that Samsung agreed to a delay. It also seems that the Australian judge dismissed Samsung's related argument. But it's certainly true that whatever happens in one jurisdiction can potentially have a psychological effect on judges in other places.

In legal terms, the judge in California (where Apple is seeking a preliminary injunction against four Samsung products) will take her decision independently from whatever rulings are handed in Australia and the EU. Still, Apple's "copycat" story benefits from each and every bit of progress the company makes against Samsung.

While Apple's Australian business certainly benefits from not having to compete with the Galaxy Tab 10.1 for the time being, the one thing Apple primarily wants to do is pave the way for what could be a decisive victory in the United States in October. If Apple obtains a preliminary injunction in the U.S., or at some point appears fairly likely to succeed, Samsung will come under a lot of pressure to work out a settlement with Apple. But if Apple doesn't win in California, Samsung will likely accept the opportunity cost it incurs in Australia and parts of Europe and continue to pursue its longer-term strategy.

It won't be possible for Samsung to fend off all of Apple's attacks. Sooner or later, Apple will successfully assert intellectual property rights in pretty much every major jurisdiction with strong patent and design protection. But as long as Samsung can play for time and maybe get away with minor design changes or technical adjustments here and there, Samsung will keep on fighting.

According to the reports I read, Apple's and Samsung's lawyers disagreed at the hearing today on whether or not Samsung was able to work around some of Apple's asserted patents without a degradation of the quality of its products.

Apple's lawyer talked about "reduced functionality" while Samsung's lawyer claimed the Australian version was just "different" from the U.S. version.

I haven't seen the sample product Samsung provided to Apple, so I don't know. Sometimes it's possible to work around a patent without any adverse effect on product quality. But I've seen some pretty broad Apple patents that can't be worked around without either reducing functionality or degrading the user experience.

In my view, Apple will sooner or later enforce enough patents against Android-based products that there will be a noticeable degradation, even though the lawyers of Android device makers such as Samsung will always deny it.

Most financial analysts know too little about patents to understand what Google's acquisition of Motorola Mobility (MMI) is about -- it's not patents no matter how many people think or claim so. No one has presented any plausible reason why Apple and Microsoft decided last year to bring patent infringement claims against Motorola if those patents are so strong that they can protect the entire Android ecosystem. I believe Apple's and Microsoft's intellectual property experts know a whole lot more about patent litigation and licensing than all of the world's analysts combined. If they looked at Motorola's patents and decided to attack anyway, that says a lot. Besides many sellside analysts, there are also patent lawyers who are quoted in the media. None of them, however, works on any of the relevant cases.

But one of the craziest things I read in recent days was an analyst's opinion that things would get better for Samsung after Google closes its acquisition of MMI and then comes to the aide of Samsung. There's no reason to assume that the average strength of an MMI patent is substantially greater than the average strength of a Samsung patent for purposes of litigating against Apple. But Samsung owns far more patents than MMI. Samsung owns more patents just in the U.S. (roughly 28,000) than MMI's worldwide patents and patent applications combined (about 24,000).

Apart from the fact that Samsung would be in a better position to help MMI out than the other way round, Google wouldn't even want to do much for Samsung. Google's acquisition of MMI isn't going to benefit Samsung. In this context I'd like to recommend an excellent and balanced article written by The Register's Gavin Clarke on Android being a blessing and a curse for Linux. That article also talks about Google's claims of other device makers welcoming its acquisition of MMI and Samsung's plans to gain independence from Android.

In the meantime, of course, Samsung defends its Android-based products against Apple. At today's court hearing, Samsung announced that it would bring counterclaims accusing Apple of infringing some of Samsung's patents with the iPad. That's what Samsung has already done in other jurisdictions. The problem is that it probably won't get a fast-track decision on this because the current iPad generation has been available for a number of months.

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About Me

Florian Mueller is a former award-winning intellectual property activist with 25 years of software industry expertise spanning across different market segments (games, education, productivity and infrastructure software), diverse business models and a variety of technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof.) He is now developing a game app for smartphones and tablet computers.